Buy Software Developer Insurance

Software developer insurance is a type of insurance that protects software developers and their businesses from potential financial losses due to errors or omissions in their software development process.

It may also cover any legal fees or costs that may arise from disputes or lawsuits related to their software development work.

This type of insurance is designed to protect developers from claims of copyright infringement, trademark infringement, data breaches, and other issues that may arise from the development and distribution of software.

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small software developers ranges from $27 to $39 per month based on location, size, payroll, sales and experience.

Software developers need insurance for a variety of reasons. Firstly, insurance provides financial protection in case of unforeseen events, such as accidents or legal disputes. This is especially important for software developers, as their work often involves creating complex systems and interacting with sensitive data.

Additionally, software developer insurance can help them protect their reputation and credibility. For example, if a developer is sued for copyright infringement or data breaches, insurance can help cover legal fees and damage control. This can be crucial in maintaining the developer's reputation and credibility in the industry.

Finally, insurance can provide peace of mind for software developers, allowing them to focus on their work without worrying about potential risks. Overall, insurance is an important aspect of risk management for software developers and can help them navigate challenges and unforeseen events in their career.

Some specific types of coverage that can protect your software business from claims and related loss include:

• Data breach coverage. When customer data is breached, stole, lost, or compromised, this coverage can help you address the legal fallout, covering expenses so that your liability doesn't negatively impact your business operation. It can also help you to meet any legal regulations that are imposed on your business, since it may be a required coverage type, based on the software you develop.
• Commercial property insurance. Protect the facility in which you do business and any collateral you have in the business with this type of insurance.
• Loss of business coverage. If you are forced to close down operations for a covered peril, then this coverage helps to replace the income lost, enabling you to continue operation.
• Worker's compensation. state regulations mandate the purchase of this type of coverage for all non-owner employees. It pays monetary compensation and medical costs for employees who become ill or injured due to a work-related event.
• Professional liability coverage. Errors and omissions policies or professional liability policies covers damages that arise if your performance fails to satisfy the client's expectations. Oftentimes, this type of insurance is purchased with a copyright infringement rider.
• General liability insurance: Accidents happen and this software development policy can protect you if you're held responsible. If a client slips and falls while on your property, you're accused of libel or slander, or you cause damage to someone else's property, this insurance can provide compensation to the damaged party or cover your legal defense and fees.
• Business owner insurance. This type of policy, sometimes called a BOP policy, combines the above general liability and property coverage into one.

These policies are essential in a number of situations. Some possible scenarios where software developer insurance liability coverage can be a godsend include:

Your network management team takes on a gig to upgrade a business' infrastructure, but they miss the deadline because of management breakdown issues. This results in the client losing money, and the client files suit against the service provider as a result.

You are a software vendor who provides software and hardware for a business to record its employee hours. A glitch in the system you install results in employee hours failing to properly record. The system overpays some employees and underpays others. The time clocks require replacement, and claims are filed against you.

You sell a defective computer system to a store; the system does not have the right security precautions on board, and a hacker eventually hacks the database and steals credit card data belonging to customers. The store files a claim against you.

Premises liability exposure is minimal since most client contact is done electronically or by mail. Off-premises exposures arise from sales visits, training sessions, and installation of software or hardware at the customer's premises. There should be policies and training regarding acceptable off-premises behavior.

If the developer works on the client's computer, the client's property could be damaged, either the actual hardware or by corrupting code on the existing software. Personal injury exposures arise from breach of confidentiality as employees dealing with clients have access to their records.

Professional liability and errors and omissions exposures are extensive but vary by the type of software and its intended use. If the customized software is essential to the business's operation or used to provide safety services, the errors and omission exposure will be higher as there may be long-term consequences.

Workers compensation exposure is limited to that of an office, although there may be significant off-site work. As work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations. Back sprains and strains can result from lifting and other material handling if there is any moving of computers or related equipment.

Property exposures consist of an office operation, as well as any incidental storage and areas for service work on computers. Ignition sources include extensive electrical wiring to support computers and servers, heating and air conditioning systems, wear, and overheating of equipment. Fire, smoke, and water can cause significant damage to equipment. Fire protection should consist of chemical applications instead of water.

Although computer equipment can be included as part of the business personal property coverage, more complete protection is available under a computer or EDP policy. A detailed emergency plan should be in place since downtime is not an option. Extra expense coverage is needed more than business income due to contract deadline dates and should be purchased as a part of the EDP policy. The concentration of electronic equipment may be targeted by thieves. Appropriate security controls should be taken including physical barriers to prevent access to the premises after hours and an alarm system that reports directly to a central station or the police department.

Equipment breakdown exposures are typically moderate. Climate control is essential to proper computer function, and breakdown of the air-conditioning units may cause serious loss. There is also significant potential for direct or indirect loss due to computer breakdown or damage by power surges and power failure, affecting hardware, data, and media. Coverage may be addressed under either an EDP or equipment breakdown policy.

Crime exposure is from employee dishonesty and computer fraud. Developers may have access to private financial information of their clients, especially for billing purposes, and represent a target item for identity theft. Hazards increase in the absence of proper background checks and monitoring of the insured's workers who may have such access.

Inland marine exposure includes accounts receivable if the programmer offers credit, computers, and valuable papers and records for customers' information. A computer or EDP policy is critical since it covers hardware, software, and media. There should be frequent backup and off-site data storage. Typically the developer works at the client's premises, presenting transit and off-premises exposures.

There is a high risk of theft, both of portable hardware such as laptops and handhelds and of the software programs. Extra expense is an important option to purchase because of the need to quickly return to operation after a loss and meet contractual obligations. Information used to document the programming is not software and must be insured as valuable papers or its digital equivalent. All contracts, documentation, software design, copyrights, and patents, on paper, disks or other media, should be duplicated and the duplicates should be kept off site.

Business auto exposure may be limited to hired and non-owned. There will likely be extensive off-premises work by sales representatives, programmers, and technicians. The developer may have a fleet of private passenger vehicles, require that employees use their own vehicles, or may use rental vehicles. If vehicles are provided to employees, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained and records kept in a central location.

Here are some reasons why software developers may be sued:

Intellectual property infringement: Software developers may be sued for allegedly infringing on the intellectual property rights of others, such as copyright, trademark, or patent infringement. For example, if a software developer uses code or design elements without proper authorization, they may face a lawsuit from the original creator or owner of the intellectual property.
How insurance can help: A professional liability insurance policy, also known as errors and omissions (E&O) insurance, can provide coverage for intellectual property infringement claims. It may help cover legal defense costs, settlements, or judgments, up to the policy limits, if the software developer is found liable for intellectual property infringement.

Breach of contract: Software developers may be sued for failing to deliver a software product or service as promised in a contract. For example, if a software developer fails to meet a project deadline or deliver the expected functionalities, the client may sue for breach of contract, claiming financial losses or damages.
How insurance can help: A professional liability insurance policy may provide coverage for breach of contract claims. It can help cover legal defense costs, settlements, or judgments if the software developer is found liable for breaching a contract.

Negligence or errors in software development: Software developers may be sued for making mistakes, errors, or omissions in the development of software that result in financial losses or damages to their clients or end-users. For example, if a software developer introduces a bug or a security vulnerability that causes data loss or system failure, they may be held liable for negligence.
How insurance can help: A professional liability insurance policy can provide coverage for claims of negligence or errors in software development. It may help cover legal defense costs, settlements, or judgments if the software developer is found liable for negligence or errors in their work.

Data breaches or cyber incidents: Software developers may be sued for data breaches or cyber incidents that occur due to vulnerabilities or flaws in their software. If a data breach occurs and results in the unauthorized access, theft, or exposure of sensitive data, the software developer may face lawsuits from affected parties.
How insurance can help: Cyber liability insurance can provide coverage for data breaches or cyber incidents. It may help cover legal defense costs, settlements, or judgments related to data breaches or cyber incidents, including costs associated with notification and credit monitoring services for affected parties, as well as potential fines and penalties.

It's important to note that insurance policies may have limitations, exclusions, and deductibles, and coverage may vary depending on the specific terms and conditions of the policy. It's crucial for software developers to carefully review their insurance policies, understand their coverage, and work with a qualified insurance professional to ensure they have adequate insurance protection for their specific needs and risks.